President Clinton’s decision to bring the Middle East peace process into the Oval Office has set the stage for dramatic U.S. intervention.

But even before the high-stakes presidential plan fully emerges, unrelated events are threatening to scuttle the initiative.

The sex scandal that has rocked the White House and the increasing probability of an American military strike against Iraq have raised questions about the administration’s ability to sustain a high-level diplomatic initiative.

Nonetheless, Secretary of State Madeleine Albright is still planning to bring Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority Chairman Yasser Arafat together before the end of next month to follow up on last week’s separate sessions with Clinton.

In fact, Albright was scheduled to meet Netanyahu and Arafat separately during a visit to the Middle East this week. Much of her attention during that trip, however, was expected to focus on the escalating crisis with Iraq.

At some point, probably after a visit by U.S. special Middle East Coordinator Dennis Ross, Albright plans to present a detailed American proposal to Netanyahu and Arafat in an effort to bridge the wide gaps that continue to divide the two sides.

But only sustained pressure from the administration is likely to revive a dying process.

For Israel, the key question is whether the pressure is off, as many in Israel seem to believe, or whether the administration will continue to press Netanyahu to accept a proposal that he feels less than comfortable with.

Clinton friends say that given his embattled presidency, he is likely to work even harder on the issues of the day. But they believe that a weaker president does not have the political capital to pressure Netanyahu in particular to accept the U.S. plan.

“The whole American political system will be hard pressed to deal with the peace process with a clear head,” said Itamar Rabinovich, Israel’s former ambassador to the United States.

“Washington is a one-crisis town,” said Rabinovich, who currently is a senior fellow at Tel Aviv University’s Moshe Dayan Center for Middle Eastern and African studies.

Still, U.S. officials say they will continue to push the parties to reach a new agreement.

For the first time since the Palestinians and Israelis signed the Oslo accords in 1993, the United States will present its own detailed plan that would lead to further Israeli withdrawal from the West Bank.

U.S. negotiators actively participated in crafting the Hebron Agreement, which led to the transfer of most of the West Bank town to the Palestinians a year ago.

But this time, Albright will present a formal document, according to U.S. officials, outlining what the United States believes is a reasonable compromise.

“The fact that the president is directly engaged, the fact that he has put his own ideas on the table, is something which marks a new stage,” said Martin Indyk, U.S. assistant secretary of state for Near Eastern affairs.

“I believe that both Chairman Arafat and Prime Minister Netanyahu are very conscious of the significance of this intensive presidential involvement,” added Indyk, the top U.S. official on the Middle East.

Under Israeli Prime Ministers Yitzhak Rabin and Shimon Peres, Clinton had the luxury of watching the Israelis and Palestinians move the peace process forward, with only occasional prodding from lower-level U.S. officials.

While both Netanyahu and Arafat appear to accept the framework of an American proposal, the specifics are the subject of heated debate.

For Netanyahu, the stakes of this new level of U.S. involvement are high. If he disagrees with the U.S. proposal, which he is almost certain to do, he faces the uncomfortable prospect of rejecting a formal U.S. presidential request for specific moves in the peace process.

With the United States so intimately involved in the negotiations and the monitoring of Palestinian compliance, there are many areas for “potential confrontations with the United States,” said Rabinovich, who served as ambassador under Rabin and Peres and sat in on many of their sessions with Clinton.

Israel’s relationship with the United States will fluctuate with the “ups and downs of Israel’s relationship with the Palestinians,” he said, adding that if the Israelis reject the American initiative, it “sets up a very dramatic failure.”

“But this does not mean that Israel has to accept every American proposal to maintain good relations with the United States,” he added.

A Palestinian rejection would also carry consequences, but the United States has been more critical of the Israeli stance. And the Israeli government’s position on these issues has come to overshadow all other areas of the U.S.- Israeli relationship.

While Netanyahu received sympathy for his concerns about the Palestinians lax battle against terrorists, it came at a price. Arafat left his meetings with some movement in U.S. policy toward recognizing the Palestinian dream of statehood.

Clinton told Arafat he recognizes that one of the principles of the peace process is that the Palestinians “realize their aspirations to live as a free people.”

Under the emerging American plan, according to U.S., Israeli and Palestinian sources:

Israel would turn over West Bank land to the Palestinians in three or four Phases during the next six months; the actual extent of the proposed withdrawal has not yet been determined;

Each redeployment would be linked to a specific Palestinian action to fulfill outstanding promises to Israel in the security arena;

Israel would agree to a “timeout” on new settlement construction and other actions that Palestinians say prejudge the final-status talks;

Final-status talks would begin before the last of the phased turnovers. These talks would focus on issues such as settlements, Jerusalem, borders and refugees;

Israel would recommit itself to one more withdrawal before the summer; and

The CIA would play a greater role in monitoring Palestinian compliance with security arrangements with Israel.

The plan would require “hard choices” by both sides, U.S. officials are fond of saying.

But will it succeed?

Since the initiative began last week, U.S., Israeli and Palestinian officials have shifted from cautious optimism to pessimism and back.

“We don’t see any real problem developing after the president laid out this conceptual idea, but that doesn’t mean we’re any closer to getting the job done,” said james Rubin, a State Department spokesman.

From the Israeli government’s perspective, the bottom line is security.

“People here think the constraints are only political but really the constraints” have to do with security, said a senior Israeli official, referring to threats by members of the Knesset to bring down the Netanyahu government if he turns over more West Bank territory to the Palestinians.

As a result, this official said, “the prime minister is on very sure footing” when he argues against certain concessions to the Palestinians.

But in this analysis, there is still wiggle room for Netanyahu.

If Arafat moves against terrorists, then Netanyahu will have “more flexibility” when considering specific withdrawal proposal.

Indeed, Netanyahu hinted at such flexibility when Clinton delivered a brief presidential lecture on the history of Middle East peacemaking after their second meeting last week.

Standing in his private residence, Clinton pointed to the desk that Israel used to sign peace agreements with Egypt, Jordan and the Palestinians.

Clinton’s message — that the desk is available for future peace signings – – was not lost on Netanyahu, who likely saw momentos from his immediate predecessors that decorate the room.

Netanyahu told Clinton that he wants to use the desk to be used again “very soon.”

But in a sign that there is still a long way to go, Clinton later told a television interviewer that it “could be” that neither Netanyahu nor Arafat really want to reach a peace accord.

Nonetheless, Clinton vowed that his administration would stay the course.